In the early stage of the 2008-2009 financial crisis, the conventional wisdom was that financial underdevelopment
of sub Saharan African economies may have been a bless-ing in disguise because it
insulated them from the direct effects of the crisis. This paper argues that this may also make African
exporters, dangerously more dependent on the health of financial institutions in countries where they
export. In the 2008-2009 financial crisis, we find that African exports to the US have been hit more
than other countries. On past financial crises (1976-2002), we find that African exporters are more
vulnerable to recessions in partner countries. Hence, African countries seem more affected by the
income effect of financial crises. In addition to this income effect, we find that, for the average
exporter, the disruption effect due to a financial crisis in the partner country is moderate (a deviation
from the gravity predicted trade of around 2 to 8%) and long lasting (around 7 years). We find
however that the disruption effect is much larger for African exporters as the fall in trade (relative to
gravity) is at least 20% more than for other countries in the aftermath of the crisis. Only a part of the
vulnerability of African exports comes from a composition effect as primary exports are hit more than
manufacturing exports. We also provide evidence that African countries more dependent on trade
finance are hit more badly.

European Report on Development
The European Report on Development (ERD) is a multiannual process, which is framed within the
initiative “Mobilizing European Research for Development Policies“. The objective of this initiative is
to enhance a European perspective on development issues in the international arena, on the basis of
knowledge excellence, innovation and building of common ground between the European research
community and policy-makers (Member States and Commission). Moreover, this initiative will
improve the visibility of the EU at a global level, help shape the international agenda and feed the EU
internal debate on development.
The ERD Team Leader is Prof. Giorgia Giovannetti. The multidisciplinary team is based at the Robert
Schuman Centre of the European University Institute and is interacting with a broad network of
scholars, from both developed and developing countries.